Taking Stock of the Yearling Sales

More than half the time, trends in yearling market and stock market are the same

Battered by wave after wave of bad economic news, the stock market is struggling. At the end of a dismal second quarter, the Dow Jones industrial average was 11,350, which was 19.9% below its all-time high that exceeded 14,000 last October. It suffered its biggest June drop (10.2%) since the Great Depression.

How much will the stock market’s declining performance affect this year’s yearling market or will it even affect it at all? When you talk to consignors and sale company officials, they differ in their opinions about the stock market’s potential impact. Some are worried while others don’t think it will be much of a factor.

Based on recent history, those who are concerned do have a reason to be wary. The Blood-Horse looked at stock market and yearling market performance over a 24-year period: 1984-2007. The figures used were the Dow Jones industrial average’s highest single day close and the average price brought by all yearlings sold at public auction in North America for each year.

During 16 or 66.7% of those years, the Dow Jones industrial average’s highest close and the average yearling price followed the same trend. Both were up from the previous year in 13 of those years, and both were down from the previous year during the other three years.

In 2007, the Dow Jones industrial average close peaked at 14,165, which was an increase from the 2006 peak of 12,511. But the 2007 yearling average of $55,300 was down from the previous year’s figure of $57,107.

For 10 consecutive years, 1993-2002, the Dow Jones Industrial average close and the yearling average followed the same trend. They both were up during eight of those years, and they both were down in the other two. During the 2004-2006 period, both the Dow Jones industrial average close and yearling average were up.